HP Looks to Limit Student Labor in China

HP is following in Apple's footsteps in attempting to address working conditions at the Chinese factories where its products are made. The move may signal a trend toward American tech companies with overseas suppliers taking more responsibility for how workers assembling their products are treated. Enforcement, however, could be an issue.

By Peter Suciu
Feb 8, 2013 3:28 PM PT

HP, one of the top three PC manufacturers, announced Friday that it had directed suppliers in China to limit their use of student labor. The move comes amid growing concerns in the tech community about working conditions in overseas factories.

The announcement also follows recent efforts by Apple to address problematic labor practices in China.

As with other high-tech companies, HP sources many of its products from China, and the company is taking a proactive stand on the increase of student and temporary workers. In many cases, underage workers -- often with forged documents -- are recruited to work in factories by agencies that offer the promise of internships or temporary assignments.

HP may not have faced the kind of negative media coverage that Apple has with this issue, it may be looking to head off any bad PR if it ends up directly connected to a scandal.

"I'd call it proactive fire prevention," said Charles King, principal analyst at Pund-IT. "Scandals around students in China being forced to work in various manufacturing jobs have been around for years, but ongoing contractions in the country's labor force mean that the practice is likely to intensify rather than retreat."

HP did not respond to our request for further details.

Future Proofing

The move by HP suggests that American companies are taking note of conditions in China and are responding. Apple, which has had more than its share of negative press for working conditions at its iPhone suppliers' factories in China, last year joined the Fair Labor Association, one of the world's largest workplace monitoring groups.

In the case of HP, it shares a manufacturer of products with Apple: Foxconn, which has been the source of bad PR because of complaints about the treatment of workers who assemble the iPhone.

Given the pressure on Foxconn to meet the labor treatments set out by the Fair Labor Association, the company will have to change its practices. In this case HP could be taking advantage of that momentum and "future proofing" against allegations.

"By putting its manufacturing partners on notice, HP is also placing the blame for any future incidents firmly on them," King told TechNewsWorld. "That may make the action seem more or less symbolic but it's a necessity given the circumstances. No U.S. company wants to be tarred with the brush of what is essentially slave labor. "

Changing Role at HP

While HP is still one of the world's tech giants, it's been the recent victim of negative press thanks to massive accounting fraud at Autonomy, a British software company it acquired in 2011. As the company attempts a turnaround, avoiding any future negative spotlight is crucial.

"This obviously has Meg Whitman's fingerprints all over it," industry analyst Jeff Kagan told TechNewsWorld. "We have to expect HP to think and act differently going forward. Yes, this is new and different for HP but may be more in line with the company going forward."

The question is whether HP can back up its warnings to its Chinese suppliers.

"It seems to be a pretty ordinary statement," said Steve Blum, president of
Tellus Venture Associates. "It's a common enough problem. Shoddy labor practices in a low wage market are exposed, large multinationals that benefit take a hit to brand image and implement, or at least announce, measures to ensure it doesn't happen again."

"They're all more or less adopting common standards," Blum told TechNewsWorld. "Costs will go up, but the problems with illegal and/or unethical labor practices are a symptom, not a cause. Wage expectations in China are rising along with living standards. A lot of the problems we're seeing with labor practices are ill-considered and ultimately futile efforts to fight that trend."

Enforcement by an outside commercial entity like HP may be mostly rhetoric, expained Pund-IT's King. "It has no effective way to force partners or government officials in China to clean up their acts. The company could threaten to reduce orders, but manufacturing options for complex technology products are limited ether by both access to skilled workers, and to areas where wages are low enough for the company to maintain competitive pricing and positive margins."